The Young and the Affluent: A Sweet Spot for Tablets

In a conversation with BTN this spring about tablets, executives from Intuit (INTU) and Citigroup (NYSE:C) detailed how they are putting more educational content on tablet apps based on early returns on the device's usage — namely that people have relationships with tablets that are much more casual and informational than smartphones.

People rarely use their iPhones to read books, for instance. In new research out Wednesday morning, Javelin has added fuel to the idea that tablets aren't just a new generation of mobility or a smaller version of a laptop, but a distinct, new channel that provides banks with a way to deepen relationships by deep content and visual engagement with a user base that sees tablet use as broader than smartphones, yet more mobile than computers.

Reaching the channel successfully has its rewards, too, since tablet users have higher incomes than average.

"When you look at smartphones, people are looking at data quickly and are getting in and out. PC users are power users, they use PCs heavily. So far with tablets, and this could change, people are more in 'layback' mode, which means they are making it a casual interaction," says Mary Monahan, executive vice president and research director at Javelin Research, which based its results in a survey of 5,211 consumers conducted online in October 2011.

To take advantage of that "casual" relationship, Javelin says tablet banking should emphasize deeper content dives, education and advice; and says visual elements — including graphical designs, personal financial management tools and video — are ideally suited to the tablet. The information-heavy preferences play out in tablet users' demands for bank services.

Tablet owners are twice as likely as non-tablet owners to want answers to customer service queries (26 percent to 14 percent); receive detailed information on bank services (25 percent to 13 percent); learn about new services (26 percent to 13 percent); and receive promotions and discounts offered by the bank through social networking sites (12 percent to six percent).

Also, tablet users are attractive demographically. Javelin says tablet owners are younger (25-44) and wealthier (average annual income over $100K) and have more investable assets. Also, more than twice as many tablet owners have business bank accounts (21 percent vs. 9 percent for non-tablet owners); money market accounts (33 percent to 18 percent) and CDs (33 percent vs. 15 percent). Among devices, the Apple iOS is particularly attractive in this regard — Javelin reports 68 percent of tablet owners with incomes over $150,000 own an iPad, as opposed to 26 percent for Android tablets and 13 percent for Amazon Fire.

While consumers use tablets differently than PCs, the best way to initially lure people to tablet banking is through the web experience, then ramp up tablet specific apps later, Javelin recommends. Twenty four percent of tablet owners access their financial accounts using a browser, while 14 percent use downloaded apps.

"People are initially going into the tablets with their old habits," Monahan says, adding that a valuable move is to develop a downloadable app in addition to browser-based tablet apps. "It will deepen the relationship."

In terms of platforms, the research firm says the iPad is the market leader with 55 percent, and reaches an affluent demographic. In developing apps for Android, Javelin says the Kindle Fire, a device being adopted by Citigroup and Bank of America (BAC) is a "compelling choice," with the largest market share of any Android device despite requiring access to an app store independent from Google. While Kindle Fire owners cannot access Google Play, all Android owners can access Amazon Apps, which means the Kindle Fire App can later be extended to reach all Android users. "Android is gaining traction; if you add up the pieces of Android, such as the Kindle Fire, you have 43 percent market share," Monahan says.

Overall, Javelin is forecasting tablet adoption to reach 40 percent of the market by 2016, up from 8 percent in 2011. Also, the firm found that 22 percent of current tablet owners are "laggards," or people who follow early adopters, suggesting the tablet channel is already maturing.

"We're going beyond early adopters, and the ownership by laggards indicates that tablets are poised for greater adoption," Monahan says.